Tension rises between Coinbase and SEC over Celsius bankruptcy plan

Quick Take

  • The SEC said Coinbase’s involvement in Celsius bankruptcy plans implicates concerns it raised in its lawsuit against the exchange. 

Tensions between Coinbase and the Securities and Exchange Commission heated up Monday, following fresh concerns from the regulator about the crypto exchange's involvement in Celsius Network’s bankruptcy plan. 

Celsius plans to use Coinbase to distribute crypto for international customers and wants the court's approval for a series of agreements with the exchange, the SEC said in a Friday filing

"However, the Coinbase Agreements go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns raised in the SEC's District Court action against Coinbase," the SEC said. 

Coinbase and the SEC have been at odds, especially after the regulator issued a Wells notice to the exchange in March and later filed a lawsuit against it for operating as an unregistered broker and exchange in violation of federal securities laws. 

"Coinbase is proud to engage with Celsius to distribute crypto back to its customers. I wonder, why would the SEC object to a trusted US public company taking on this role?" Coinbase Chief Legal Officer Paul Grewal posted on X on Monday.


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Celsius' legal woes

Celsius filed for bankruptcy last year and owes billions of dollars to investors. The SEC sued Celsius and its former CEO Alex Mashinsky in July for allegedly raising billions through fraudulent and unregistered sales of "crypto asset securities," repeatedly lying to investors about Celsius' financial standing, and manipulating the price of CEL, the company's native token. 

Others, too, have objected to Celsius’ plan over the past few days, including the U.S. Trustee which reiterated concerns from August over whether creditors have enough information to help them make an informed decision to approve the plan or not. 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.


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